Kigali, Rwanda
[Remarks as Prepared]
ASSISTANT TO THE ADMINISTRATOR DINA ESPOSITO: Welcome. It’s my great pleasure to be here representing USAID.
I want to start with a special thanks to AGRA for their close partnership and express my deep appreciation for their leader, Agnes Kalibata, whose expert insights and visionary leadership have fueled AGRA’s growth and, more importantly, its impact, helping transform subsistence farms into thriving commercial businesses; reducing hunger, poverty; and improving nutrition in the process.
I’m excited to once again be part of the Deal Room, where each year so many exciting partnerships emerge. As we recover from multiple shocks impacting food security and nutrition on the continent, the financing opportunities and partnerships that develop here have never been more important.
While the global market and food security shocks of the last few years are largely behind us, Africa continues to face high food and input costs, debt distress, currency volatility, and the effects of conflict and climate shocks, including the recent El Niño effects – all of which undermine progress. Witness the somber statistic offered by FAO’s latest SOFI report: Africa is one of the few regions of the world where undernourishment has continued to rise in recent years.
Reflecting Africa’s great need but also its great potential, President Biden launched a new U.S.-AU strategic partnership to support more productive and resilient food systems on the continent. The U.S. government’s global hunger initiative Feed the Future prioritizes investments here, providing more than $400 million each year to increase inclusive and sustainable agricultural growth, build resilience, and improve nutrition.
Over the past two years, the U.S. Congress has also provided more than $500 million in supplemental development assistance through Feed the Future to the African continent, in response to global food shocks triggered or exacerbated by Russia’s unjustified full-scale invasion of Ukraine.
Today, pending Congressional approval, I am pleased to announce an additional $40 million of new Feed the Future development funds to support African farmers and food systems as they grapple with the effects of El Niño and other shocks and look towards what we anticipate will be a much better season ahead.
The provision of these supplemental funds through Feed the Future reflects U.S. understanding that we simply cannot afford to step back into the habit of solving hunger with the blunt tool of emergency aid alone. Together, we must accelerate support for policy reforms and programs that facilitate deeper investments in research and innovation, scale farmer access to improved seeds, better agronomic practices and weather information services, expand value addition and regional trade opportunities, and increase availability of nutritious foods on local markets, ensuring that women and young people fully benefit from emerging opportunities across agri-food systems.
The deal room is about expanding trade and investment opportunities, and I want to specifically highlight here our work to help unlock additional finance for small and medium enterprises or agri-SMEs working in the food system.
Agri-SMEs are Africa’s largest employer and economic engine, and are key change agents to boost production and help communities and households access safe, healthy, and affordable foods. They are a driving force behind sub-Saharan African food systems, creating jobs, and supporting 95 percent of smallholder farmers with critical tools and services they need to grow and prosper – delivering seeds and fertilizer, providing training, purchasing food from farmers, and transporting, storing, and processing food.
Despite their importance, three out of four African agri-SMEs cannot access formal bank loans and are too large for microfinance, contributing to an estimated $74 billion gap in unmet demand for financing.
The United States development investments are increasingly focused on public-private partnerships and blended finance to fuel private sector investment and de-risk lending to farmers and agri-SMEs. We support lending criteria that create more opportunities for women and advance climate-smart agriculture. And, we are currently testing a new nutrition investing framework to help investors screen for positive nutrition outcomes, as well.
At the national level, through the social enterprise, Aceli Africa, and in partnership with six other anchor bi-lateral donors, we are supporting blended finance to incentivize local banks to lend to segments they don’t traditionally serve, helping them overcome the high costs and risks associated with lending to agri-SMEs. So far, Aceli has partnered with 38 active lending partners in East Africa, resulting in nearly 1,500 loans with an average loan size of $100,000.
Because of these investments, fruit processors in Tanzania have increased their capacity to process and market nutritious foods sourced from smallholder producers. And, dairy processors in Rwanda are now able to meet quality standards for their value-added products, including yogurt and cheese. Here in Rwanda, a coffee aggregator has seen revenue surge by 64 percent since her loan three years ago, and her payments to farmers have increased by 138 percent. Additionally, 44 percent of her growers and 50 percent of her workers are women.
Altogether, SMEs have received $142 million in Aceli-supported loans, enabling them to create market access for 843,000 smallholder farmers and employment for 25,000 full-time workers.
While Aceli is incentivizing loans directly to stakeholders in the agrifood system from banks using local deposits, there is also a notable gap in efforts to unlock and crowd-in new international private capital.
So, at the global level, to address this, the United States and Norway announced last year the Financing for Agricultural SMEs in Africa (FASA) Fund, which will invest concessional capital to investment funds. Together, USAID and Norway have committed a total of $70 million, and we aim to reach $200 million through additional donor contributions.
These will be invested as catalytic capital in specialized investment funds targeting agri-SMEs. By reducing investment risks, this approach aims to attract further commercial financing. The Fund will actively invest in climate adaptation; gender equality; crop diversity to better withstand shocks from pests, weather, and disease; and regenerative agriculture practices that integrate conservation efforts and restore soil health.
The United States knows that supporting strong African food systems and businesses is good not only for Africa, but for the United States.
This year, more than 60 representatives from across USAID’s 39 offices in Africa and from Washington, along with representatives from the U.S. Department of State, the Department of Agriculture, the Millennium Challenge Corporation, and other U.S. government agencies are here – in the Deal Room and around the Forum. This reflects both the importance of this forum and our readiness to work with you, our partners, to help Africa continue to unlock its extraordinary potential to not only feed itself but help feed the world.
Please come and find us. We are eager to discuss ongoing partnerships and to forge new ones.
Thank you.